Many parents who take on this debt burden harm their retirement. Here are some ways families can manage costs of student loan debt.
This year’s high school graduates could take on nearly $40,000 in student loan debt in pursuit of a bachelor’s degree, according to a NerdWallet analysis. And with this debt stretching across federal, parent and private loan sources, the final cost of their education will grow far beyond tuition and fees.This year’s high school graduates could take on nearly $40,000 in student loan debt in pursuit of a bachelor’s degree, according to a NerdWallet analysis.
The average cost of attending a four-year public university, including room and board, reached $22,700 this most recent school year, according to The College Board. Growth in these costs has slowed considerably over the past decade — climbing 12% from the fall semesters of 2012 to 2021 after rising 22% from the fall semesters of 2002 to 2011. But the burden of student loan debt is still significant.
Parents increasingly picking up debt tab The share of parents taking out federal parent PLUS loans to help cover the costs of their children’s college education has grown significantly. So has how much they’re borrowing. From 1996 to 2016, the most recent year for which this data is available, the share of dependent students relying on these federal parent loans at public four-year institutions grew from about 7% to 12%, according to the National Center for Education Statistics.
Parents may reason that they’re better equipped than their children to cover the added cost of borrowing, but some may think they have no choice. The Pell Grant, the largest source of need-based grant aid, has failed to keep up with the rising cost of education, or even with the pace of inflation, according to an earlier NerdWallet analysis.
For example, private loans generally come at a higher interest rate, lack income-based repayment options and are less forgiving when borrowers have trouble making monthly payments. In addition, private student loans weren’t included in the federal interest-free forbearance period recently extended through Aug. 31, 2022.
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